Which of the following is anincorrectstatement regarding the relationship between Abnormal Returns (Alphas) that a fund generates and its Tracking Error against a benchmark?

1. Tracking errors cannot be negative but abnormal returns (Alphas) can be negative
2. High Abnormal Returns (Alphas) are a result of high Tracking Errors.
3. Investors determine the level of tracking error and then choose the fund that has a high significant abnormal return (alpha)
4. High Tracking Error can result in low and negative Abnormal Returns (Alphas)
5. High Tracking Error results in high positive Abnormal Returns (Alphas)